State Rep. Joe Jett has been a passionate fan of aviation his whole adult life. He worked as an air traffic controller amid the dramatic strike in 1982, has an airline-transport pilot’s license and is a single-engine flight instructor. On weekends, the Republican from the Clay County town of Success even relaxes by flying a friend’s crop-dusting plane over rural Arkansas farmland.
That love of all things flight-related has carried over into his legislative career, where he has sought to create bills that help Arkansas’ $14 million aviation and aeronautics industry thrive. His latest measure, which began life this session as House Bill 1010 before being signed into law by Gov. Asa Hutchinson as Act 142, amends the sales-and-use tax exemption for sales of certain aircraft, and should provide a great boost to the many RMOs — Repair Maintenance and Operations specialists — employed across the state.
Rep. Joe Jett
“It’s a project that we’ve worked on for the last several sessions,” explained Jett, who has served as the chairman of the legislature’s Revenue and Tax Committee for the last four sessions. “Arkansas is unique in the way that funding flows into a special-use fund within the Department of Aeronautics like the sales tax on airplanes, parts and repair and fuel for aviation. That money then flows out to the 92 airports across the state of Arkansas, enabling them to be better maintained than those found in most other states.
“This exemption makes it possible for more planes to be sold within Arkansas and kept here for all the attendant maintenance, repairs and painting that comes along with a change of ownership. And that ultimately keeps more money in the state and provides plenty of jobs in those support industries.”
Catering to the aviation industry is vital, Jett notes, as it is one of the state’s largest business sectors. One of the top beneficiaries of the tax-friendly legislation is Carl Finch, who heads the Air Resource Group, an aviation consulting business that offers charter brokerage services, turnkey aircraft management and market intelligence analysis to clients nationwide from its Little Rock headquarters.
Finch notes that Act 142 is “very important” for the state, as it not only boosts the prospects of the support industries but also adjusts the prior laws governing sales taxes to generate more revenue for the state. The law resulted from a series of bills that gradually created exemptions for sales tax on aircraft starting with those that weighed 12,000 pounds, then 9,000 pounds and then removing the tax from all planes sold to out-of-state buyers.
With buyers freed from the onerous tax, they now are more likely to stay in Arkansas for all the support work that’s key to any sale.
“Arkansas probably had one of the worst flyaway laws, which means that when an aircraft transaction takes place, it then leaves the state that the transaction was made in,” Finch said. “Basically, if an aircraft is going to be sold within a state but be based somewhere else and subject to sales-and-use taxes there, nobody’s going to pay sales tax twice on an airplane, and they do whatever it takes to make sure they don’t.
“The way the law used to be written is if a transaction was closed with the aircraft on the ground in Arkansas, regardless of who the buyer or seller was, the seller was obligated to collect sales tax on that. No one’s gonna do that, so they’ll do whatever they have to do to avoid paying the tax. And if you couldn’t close the transaction with the aircraft on the ground, all that was negated.”
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